Monday, 9 March 2020

Corporate Governance and Stakeholders

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Corporate Governance and Stakeholders


Stakeholders are any entity, person, group or possibly non-human entity, that can affect
or can be affected by the actions or policies of an organization.
In this regard stakeholders' theory proposes corporate accountability to a broad range of
stakeholders.
Corporate governance mechanisms and controls are designed to reduce the inefficiency
that might be occurred due to certain moral ambiguities and wrong selections.
An effective system of corporate governance has both internal and external aspects that
have to be sufficiently responsive if governance is to succeed .
Internal control includes, monitoring by the board of directors, internal control procedures
and internal auditors, balance of power and remuneration.
External control relates to the governmental control, labor markets, debt covenants etc.
Bankruptcy not only affect the creditors but also affect suppliers of goods and services,
banks, financial institutions, and so on. That is why there is a need to frame a code for
protecting the different interest groups from the damage of their economic interest.
India does not have a clear and comprehensive law on corporate bankruptcy. In fact, there
is even significant confusion in the meaning of the terms bankruptcy, insolvency,
liquidation and dissolution.


BIFR: Board of Industrial and Financial Reconstruction
External Control: These are external to the organisation such as governmental regulations.
Internal Control: These controls are exercised internally by the organisation.
SICA: Sick Industrial Companies (Special Provisions) Act, 1985
Stakeholders: Any entity which can affect or be affected by the organisation.

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